Aluminium extrusion industry seeks Covid-style relief after shutdowns

Writes to three ministries flagging MSME stress; seeks lower interest rates, loan moratorium, and working capital support amid shutdowns and fuel supply disruptions

Days after widespread plant shutdowns triggered by a fuel supply shock linked to the West Asia crisis, India’s aluminium extrusion industry has sought Covid-style financial relief from the government, warning of a deepening liquidity crunch, according to letters reviewed by Business Standard.

 

Business Standard on March 23 reported that at least 25 aluminium extrusion units across the country have shut down, while nearly 200 are operating at about half their capacity.

 

In letters addressed to the secretaries of the ministries of finance, commerce and industry, and MSME, the industry body said companies are facing severe financial stress amid curtailed operations.

 

“Given the capital-intensive nature of our industry, most manufacturers are servicing working capital loans and term loans with regular obligations towards interest and principal repayments. However, with operations curtailed and no immediate resolution to the supply constraints in sight, the industry is facing serious liquidity stress and may be unable to meet its financial commitments,” the letter said.

 

At the core of the industry’s appeal is a relief package “similar to those provided during the Covid period”. These include a reduction in interest rates, a moratorium on term loan repayments, deferment of interest liabilities, government-backed working capital support, and relaxation in credit reporting norms for loan defaults during the current period.

 

The appeal follows a sharp curtailment in LPG and PNG supplies linked to the West Asia crisis, which has forced several units to halt operations while others scale down production. “As a result of the acute shortage and restricted supply prioritisation by the Ministry of Petroleum and Natural Gas, many extrusion units have been compelled to either shut down operations or reduce production capacity by 30–70 per cent,” the letter said.

 

“Right now, our interest rate is around 9 per cent. We are asking for it to be reduced to about 7–7.5 per cent,” said Ankur Aggarwal, general secretary of the Aluminium Extrusion Manufacturers Association of India.

 

“There should be an option to defer loan repayments. If we default in this situation, it should not impact our credit ratings,” he said, adding that, similar to the Covid period, government-backed working capital support is needed as units are sitting idle and incurring losses.